A Tale of Two Reports. Commonwealth Fund and Milliman.

Want to think some more about reducing healthcare costs? Neither does the Disease Management Care Blog but, nonetheless, two reports deserve your attention. One is a retread of some unproven policy notions swirling about Washington DC. The other makes for a refreshing read from an actuarially sound point of view.

The Commonwealth Fund report on a High Performance U.S. Health System would naively spread the costs of an out of control healthcare system over a larger payer base. By forcing more persons to join, the average cost of the insurance premium may drop but overall costs will continue to grow. The DMCB also continues to be amazed over the faux certainty that the medical home, health information technology or patient-centered-care will measurably increase quality or reduce claims expense. The DMCB also doesn’t understand the difference between The Commonwealth Fund’s support for capped premiums and Nixonian price controls, or if either are reasonable in a real world risk-transfer environment. That being said, there are some other meritorious ideas, including bundled payments. Look it over for yourself and decide.

In contrast, check out this report from the 100% actuary guys at Milliman. While less likely to attract the attention of the policy elites or the blogmos, the DMCB likes this because it tackles healthcare cost inflation in lieu of recycling policy fluff. Bruce Pyenson et al present a series of options that, while politically challenging, are meaningful long-term goals that will fit into any future payment system, public or private or both.

According to these guys, reducing the rate of healthcare inflation from 16% of GDP to 12% (a 25% decrease) can be achieved by exporting the best practices that are already active in many areas of the United States to the rest of the country. This will shift utilization, without having to change the reimbursement (i.e., cost cutting) per unit of service.

Here's a shortened summary of Milliman's excellent recommendations. The DMCB thinks they make for good benchmarks next time you hear or read others' ideas on how to get health care costs under control as part of our reform efforts:

Reduce overall utilization and variation to levels being achieved at Intermountain Healthcare and Mayo (maybe venture capital is warranted at finding successful ways to align independent health care entities at a regional level?)

Make hospital-based health care services available 7 days a week (don't let a weekend get in the way of performing needed testing and treatment)

Put hospitalists in control of inpatient stays and make specialists readily available for consultations (the DMCB is convinced that hospitalists make for more efficient inpatient stays)

Implement inpatient pathways, order sets, computerized order entry (these are the inpatient parts of the electronic record that have been shown to improve efficiency and reduce complications)

Reduce medically unnecessary admissions from the ER to the inpatient setting (once an ill patient crosses the ER threshold, it's very hard to return them home. It's far easier to admit and move onto the next patient)

Optimize discharge planning (the weeks after discharge from a hospital is a time of great vulnerability. Patients are still sick and may not know what to do to cope)

Routinely get family involved (back in the day, the DMCB asked family to come in and learn how to care for Mom. The nurses were more than happy to help teach. Anecdotally, it works)

For patients already in nursing homes, manage their needs as much as possible there rather than transferring to a hospital (physicians will recognize that nursing homes are a rich source of transfers to the emergency room and that most get admitted to the hospital).

Promote commoditized generic medications, durable medical equipment, outsourced (overseas) radiology interpretation, drug importations and medical tourism (it's called price competition).

Expedite FDA approval process,

Enhance the financial transparency behind drug purchasing (this is a morass of contracting arrangements where everybody wins except the consumer)

Promote skin in the game for patients' medication adherence and persistence,

Capitlize on personalized medicine to target prescribing for maximum outcomes

Allow nurse practitioners to prescribe.

Give up on the notion that health care is local (while the DMCB is uncomfortable with the notion that once size fits all, standards of care can be combined with expected patterning so that a less than 100% fulfillment rate is not only accepted, but expected)

Standardize protocols surrounding patients who are in end-of-life care including promoting home-based care, following advance directives, doing comparative effectiveness research on high tech care options, using hospice as the control arm and focus on comparative effectiveness studies (end of life care is where there are huge cost opportunities).

The Milliman report is also interesting for what it doesn't include, like disease management. It correctly notes that it's role in reducing costs to a significant degree - compared to inpatient care or pharmacy - is limited and still subject to some study.